Optus hoses down claims of impending deal with NBN Co

Optus has hosed down claims that it is in negotiations with the NBN Co to transfer its cable broadband customers to the National Broadband Network (NBN).

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According to a report in the Australian Financial Review the telco is in “advanced talks” with the NBN Co to transfer half a million cable broadband customers onto the NBN, in a deal similar to the recent $11 billion agreement struck by Telstra and the NBN Co in June.

According to the AFR, a deal with Optus would be “critical” to the success of Labor’s $43 billion NBN as it would eliminate a competing network that already offers broadband speeds of 100 megabits per second (Mbps).

A spokesperson from Optus told Computerworld Australia the report was “purely speculative”, however did not deny that it was in discussions with NBN Co.

“Like all retail service providers, Optus is engaged in ongoing discussions with NBN Co, DBCDE [Department of Broadband, Communication and the Digital Economy] and the industry more broadly around next steps for the NBN,” the spokesperson said.

The spokesperson would not comment on whether Optus was additionally in discussions with NBN Co on the sale or an access deal for Optus’ networking assets.

The spokesperson also did not comment on the potential value of such a deal or whether it would additionally transfer across its telephony customers to the NBN.

Independent telco expert, Paul Budde, argued that a deal between Optus and NBN Co made sense, being the next telco in line after Telstra to strike an agreement with the national infrastructure provider.

“Obviously the Telstra deal did set the scene and now the others are following, so Optus will be next but obviously there are more companies so each one of them will have to make a particular arrangement with NBN Co," he said. "It makes sense with Optus being the second biggest one for them to be the next cab of the rank.”

According to Budde, the customer component of the recent NBN Co and Telstra deal saw some $5 billion paid for an approximate two to three million customers. Based on this figure the potential value of Optus’ broadband customers could be between $0.83 billion and $1.25 billion.

Budde said that a deal between Optus and NBN Co would likely involve an outsourcing agreement, similar to the outsourcing contract the company has with Telstra, so Optus’ assets can be used by the NBN Co. However, the negotiations would determine what assets the NBN Co required, so as to avoid duplication in its network.

A deal with NBN Co was also the obvious next step for Optus, followed by other internet service providers, Budde said.

“[Optus] clearly indicated when the deal with Telstra was done that they would be interested in a deal like this, as are the others, iiNet and Internode," he said. "Each one of them is obviously negotiating with NBN Co in where they fit in going forward.”

An NBN Co spokesperson declined to comment on the NBN CO and Optus discussions.

Copyright © 2010 IDG Communications, Inc.

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